Publications
Publications
- February 1997 (Revised July 2001)
- HBS Case Collection
Introduction to Activity-Based Costing
By: Robert S. Kaplan
Abstract
Introduces the fundamental notions of activity-based costing (ABC). Motivates ABC by means of a simple example, a single and a diversified pen factory. Proceeds to show how ABC assigns costs more accurately to products and customers by: 1) identifying the activities being performed by organizational resources; 2) assigning resource costs to the activities; 3) identifying all the products, services, and customers of the organization; and 4) assigning activity costs to these outputs via activity cost drivers. Also covers activity attributes, such as the cost hierarchy, value and non-value added, and business processes, as well as different types of activity cost drivers: transaction, duration, and intensity. Closes with the admonition to balance the benefits from more accurate cost estimates with the cost of developing an appropriate activity-based cost system.
Keywords
Citation
Kaplan, Robert S. "Introduction to Activity-Based Costing." Harvard Business School Background Note 197-076, February 1997. (Revised July 2001.)